Washington Extra – Cattle prod

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.As market maven Mohamed El-Erian told us today “The medium term has a way of creeping up on you.” That’s why everyone needs a cattle prod from time to time and today it was Washington’s turn to get a goading.

It came in the form of Standard & Poor’s decision to slap a negative outlook on America’s top-notch credit rating because of Washington’s plodding pace on deficit reduction. The White House and Congress need to get in gear and start making meaningful plans to cut the deficit or else be responsible for a dreaded downgrade in debt. The chances? One-in-three over two years.

S&P took most everyone by surprise, although the White House knew on Friday. In three days, it prepared the defenses: 1) S&P is making a “political judgment”; 2) “we shouldn’t overreact”; 3) actually we are closer than you think in agreeing with Republicans about the way forward.

That might be so. But El-Erian, who has lived through many a debt downgrade and default over the years, noted there are three steps to any credible adjustment and the United States hasn’t even done the first one: “formulating the action plan.”

Here are our top stories from Washington…

S&P move puts pressure on Congress, White House

Standard & Poor’s set a timer on the U.S. debt debate, pushing President Obama and Republicans to strike a deficit-cutting deal soon with a threat to strip Washington of its coveted triple-A credit rating. But S&P’s action — downgrading its outlook to negative from stable — does not guarantee a deal. While the White House dismissed the action, saying all sides were making progress toward agreement, Republicans and Democrats remain far apart on where to make the cuts that will be needed for long-term deficit reduction.

The Obama administration moved swiftly to downplay ratings agency S&P’s downgrade of its U.S. credit outlook, calling the decision a political judgment that should not be taken too seriously.

For more of this snap analysis by Jeff Mason and Corbett Daly, read here.

Huckabee is high in US polls, but on fence for 2012

Republican Mike Huckabee is riding high in the polls, but he could be running out of time to make up his mind on a run for his party’s 2012 presidential nomination. With the slow-starting race for the right to challenge President Obama gaining candidates and picking up steam, a few of Huckabee’s former advisers have jumped ship to other contenders and some observers see signs he will not run.

The Nuclear Regulatory Commission exists to police, not promote, the domestic nuclear industry — but diplomatic cables show that it is sometimes used as a sales tool to help push American technology to foreign governments. The cables, obtained by WikiLeaks and provided to Reuters by a third party, shed light on the way in which embassies have pulled in the NRC when lobbying for the purchase of equipment made by Westinghouse and other domestic manufacturers.

For more of this exclusive story by Roberta Rampton and Ben Berkowitz, read here.

FDIC says could have recovered much of Lehman

Lehman Brothers creditors could have recovered much more money after the investment bank’s failure in 2008 if bank regulators had the power to seize the firm, the FDIC said in a report. The FDIC, which acquired so-called “orderly liquidation authority” last year, said general unsecured creditors could have recovered 97 cents on every $1 of claims, if regulators had quickly carried out a structured sale of Lehman’s assets.

Microsoft urged the Supreme Court to make it easier to challenge some patents as part of its appeal of a record $290 million jury verdict for infringing a small Canadian software firm’s patent. An attorney for the world’s largest software company argued that the court should reject the long-held requirement that a defendant in a patent infringement case must prove by clear and convincing evidence that a plaintiff’s patent is invalid.

The United States is not working to undermine the Syrian government but is trying to support democratic goals as it does elsewhere in the world, the State Department said. The comments came after reports that the State Department has secretly funded Syrian opposition groups, according to diplomatic cables released by WikiLeaks.

Author Profile

Mary Milliken is Entertainment and Lifestyle Editor for the Americas since July 2013, based in Los Angeles. In 15 years with Reuters, she been bureau chief in Washington DC, the West Coast and South America and has organized news teams covering everything from presidential elections to economic crises to natural disasters. She speaks English, Spanish and Portuguese.